(Bloomberg) -- National Australia Bank Ltd. shares inched higher after plans to buy back A$1.5 billion ($1 billion) more of its own stock, as profit at the lender met expectations and Chief Executive Officer Andrew Irvine said the economic outlook remains resilient. 

Cash earnings fell 13% to A$3.55 billion in the six months ended March 31, the Melbourne-based firm said in a statement Thursday. That compared with the A$3.58 billion estimate in a Bloomberg survey of analysts.

Disciplined execution of the firm’s strategy in a challenging environment “has helped us manage the impacts of slowing economic growth and competitive pressures,” Irvine said in the statement. 

The lender is riding a robust appetite for commercial credit as it maintains a priority on business loans over the ultra-competitive home loans market. As the first of Australia’s biggest banks to provide an earnings update, investors are weighing how well these firms are dealing with a reduction in margins and uncertainty over how long central banks will stay restrictive.

The shares rose 1.9% as of 11:37 a.m. in Sydney, extending this year’s gain to more than 12%.

“We remain optimistic,” Irvine said. “Our bank and most customers are in good shape and the outlook for the Australian economy remains resilient. We are well placed to continue managing our business for the long term.”

The result from the largest of the nation’s four big lenders to the business sector was helped in particular by strong year-over-year growth of 8.6% in the small-to-medium enterprise lending. Irvine took charge of NAB last month and has promoted Rachel Slade to head the firm’s business bank, its biggest division. 

Meanwhile, net interest margin — the closely watched difference between the interest rate depositors receive versus the average rate the bank charges on loans — fell by five basis points to just 1.72%. The bank cited the intense competition in mortgages that exceeded the tailwinds from higher interest rates.

Analysts at UBS and Jarden said net interest margins topped expectations, indicating the anticipated slowdown may be moderating.

Home loan arrears only slightly ticked upward, with loans more than 90 days past due and other impairments rising 0.13 basis points to 0.79% of its book.

The bank said its technology spend grew by almost 6%, mainly on account of dealing with cyber attacks, fraud and compliance, which were only partially productivity boosts.

What Bloomberg Intelligence Says

The buyback should help offset a drop in cash profit that might decline as much as 20% after the first-half dip, according to Bloomberg Intelligence’s Matt Ingram.

“NAB’s return on equity may get a 30-bp boost from an A$1.5 billion addition to its current A$1.5 billion buyback program, which was 87% complete on March 31,” Ingram wrote in a research note Thursday.

(Updates share price in fifth paragraph. An earlier version of this story corrected the detail in final paragraph on buyback size and degree of completion in report from Bloomberg Intelligence)

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